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Yeah I don't see the controversy here. Clearly the author has an agenda. Look at this gem: "...[Mr. Woodman] was giving away much of that wealth — some $500

Yeah I don't see the controversy here. Clearly the author has an agenda. Look at this gem: "...[Mr. Woodman] was giving away much of that wealth — some $500 million worth of GoPro stock — to the Silicon Valley Community Foundation...Mr. Woodman avoided paying capital gains taxes on that $500 million worth of stock, a figure that most likely would have been in the tens of millions of dollars..." Of course he avoided capital gains on the stock he gave away - he couldn't sell it anymore because it was no longer his. The entire section about Nick Woodman strives to imply that something improper has occurred, but all I see is a successful entrepreneur that gave away a large part of his fortune. Regardless of how long it takes for that money to be distributed by the charitable fund, the money is forever no longer his.

hundt 8y ago
It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). Of course the main reason for that is other parts of the tax code, not DAFs. But I think DAFs get targeted for criticism because they make it a lot easier to exploit these kinds of flaws.
- deleted 8y ago
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- wgjordan 8y ago
  > It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). I'm not entirely sure you can, based on my reading of 26 CFR 1.170A-1(c)(3) [1]: > (3) If a donor makes a charitable contribution of property, such as stock in trade, at a time when he could not reasonably have been expected to realize its usual selling price, the value of the gift is not the usual selling price but is the amount for which the quantity of property contributed would have been sold by the donor at the time of the contribution. [1] https://www.law.cornell.edu/cfr/text/26/1.170A-1 https://www.law.cornell.edu/cfr/text/26/1.170A-1
  - hundt 8y ago
    Excellent point. I responded to your other comment on this thread.
Woberto 8y ago
He didn't actually give away money though, he gave stock which has since decreased in value dramatically. So he got a huge tax break because of the original worth, but if the stock continues dropping it might not even be worth anything by the time anybody gets around to considering distributing it. So why should he get that tax break when he really hasn't actually donated to charity and may not get to either?
- downandout 8y ago
  You're making that statement with the benefit of hindsight. The stock also could have gone up, in which case he would actually have cost himself some of the potential tax deduction by donating too early. The deduction is locked in at the value of the shares on the day they are donated. I doubt he was cheering for the stock to tank, just so that his tax deduction would be significant compared to the lower value of the stock years later. That would be insane, given that he only donated about 20% of his shares. So yes, in this case, it didn't work out for the general public. That indicates no intention of wrongdoing, nor does it indicate that the system is broken. Equity values on the whole tend to rise over time, which means that charitable stock gifts overall (especially those that are held for long periods of time) are actually better for the public than cash donations.
  - Woberto 8y ago
    From the article: "News of his donation sent GoPro shares tumbling as much as 14 percent the next day, as investors interpreted the move as a lack of confidence in the stock." It's not about wanting the stock to do poorly; as the chief executive, he knows where he plans to go with the company, and if he doesn't see it going far, then at least he can save some money. The fact that investors interpreted the move this way indicates that it's not about hindsight, but a poor forecast. Your point about values rising on average is a good one though - it means that though some of the rich may be getting away with more money, overall donations are still going to balance that. There are still some other issues though.
    - downandout 8y ago

hundt 8y ago

It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). Of course the main reason for that is other parts of the tax code, not DAFs. But I think DAFs get targeted for criticism because they make it a lot easier to exploit these kinds of flaws.

deleted 8y ago
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wgjordan 8y ago
> It's at least little bit fishy that you can get a $500 million deduction for giving away stock that is never worth $500 million to anyone (since giving it away tanked the sale price, and selling it would presumably drive it down even farther). I'm not entirely sure you can, based on my reading of 26 CFR 1.170A-1(c)(3) [1]: > (3) If a donor makes a charitable contribution of property, such as stock in trade, at a time when he could not reasonably have been expected to realize its usual selling price, the value of the gift is not the usual selling price but is the amount for which the quantity of property contributed would have been sold by the donor at the time of the contribution. [1] https://www.law.cornell.edu/cfr/text/26/1.170A-1 https://www.law.cornell.edu/cfr/text/26/1.170A-1
- hundt 8y ago
  Excellent point. I responded to your other comment on this thread.

Woberto 8y ago

He didn't actually give away money though, he gave stock which has since decreased in value dramatically. So he got a huge tax break because of the original worth, but if the stock continues dropping it might not even be worth anything by the time anybody gets around to considering distributing it. So why should he get that tax break when he really hasn't actually donated to charity and may not get to either?

downandout 8y ago
You're making that statement with the benefit of hindsight. The stock also could have gone up, in which case he would actually have cost himself some of the potential tax deduction by donating too early. The deduction is locked in at the value of the shares on the day they are donated. I doubt he was cheering for the stock to tank, just so that his tax deduction would be significant compared to the lower value of the stock years later. That would be insane, given that he only donated about 20% of his shares. So yes, in this case, it didn't work out for the general public. That indicates no intention of wrongdoing, nor does it indicate that the system is broken. Equity values on the whole tend to rise over time, which means that charitable stock gifts overall (especially those that are held for long periods of time) are actually better for the public than cash donations.
- Woberto 8y ago
  From the article: "News of his donation sent GoPro shares tumbling as much as 14 percent the next day, as investors interpreted the move as a lack of confidence in the stock." It's not about wanting the stock to do poorly; as the chief executive, he knows where he plans to go with the company, and if he doesn't see it going far, then at least he can save some money. The fact that investors interpreted the move this way indicates that it's not about hindsight, but a poor forecast. Your point about values rising on average is a good one though - it means that though some of the rich may be getting away with more money, overall donations are still going to balance that. There are still some other issues though.
  - downandout 8y ago